Home Loan Exemption Could Be Raised in Budget: KPMG

Speculations are rife about what Budget 2015 may have in store for the taxpayers and there are huge expectations surrounding it. According to Pratik Jain, partner (tax) at KPMG, though the government may not offer much to the common man due to fiscal constraints, it may raise exemption limit on home loans again.

The government may increase the interest reduction by another Rs 50,000, given the situation of real estate sector, he said. Last year, Finance Minister Arun Jaitley had raised the tax deduction against interest payment on home loan to Rs 2 lakh from Rs 1.5 lakh.

Mr Jain also said that government needs to simply taxes and it shouldn't impose a 'Swachch Bharat' cess in the Budget. (Watch)

Here is an edited transcript of his interview:

Key themes in Budget 2015

It will be a 'big bang budget'. The whole world is watching us and this is an excellent time for the government to take decisions. 'Make in India' and ease of doing business will be the key themes in the upcoming budget.

There has been a lot of debate on 'Make in India' and as it's just a concept but now many things need to be done to make it a reality.

Second key thing in the budget would be ease of doing business, as India stands at 142nd position out of 189 countries in its ranking.

Taxation in budget

We need to have a clear road map on GST (Goods and Services Tax). We know that it will be implemented on April 2016, but we also need to know what all will happen in next 1 year.

Simplify taxes: Government should remove some of the education cess and other surcharges. They are also talks about another cess called 'Swachch Bharat' cess; I hope they don't introduce those kinds of taxes.

Correct inverted duty structure: In many cases duty on raw material is higher than duty on finished products, so that needs to be corrected.

Incentives which can be given to boost manufacturing in India?

We don't have much room for new exemptions to come in, but we could expect some kind of targeted incentives for at least new entrepreneurs.

Investors are not looking at tax sops; they are looking for more stable, predictable and transparent tax system. We have multiple laws, multiple regulations and it takes huge amount of time to set up a business in India. Unless rules and regulations are simplified, investors would be reluctant to come to India.

Budget may not get too much into detail but if there may be an expression of interest in it; that would be enough. The government could set up a committee, which would study ease of doing business and give a timeline on it.

On personal taxation

Another Rs 50,000 exemption on home loan interest is a possibility. Looking at what real estate is going through, the government might be tempted to increase the interest reduction by another Rs 50,000 but beyond that don't expect any rate cuts or tweaking of slabs. This is the second budget and I don't think it will be populist at all. Don't expect common man to get many tax benefits in this budget.

On MAT

Government might not touch normal MAT (Minimum Alternate Tax) except by reducing the rate by couple of percentage points. But there has been a strong call from industry about roll back of MAT on SEZ (special economic zone).